Mr. KASTENMEIER. Thank you very much, Professor Compaine, for that presentation. It is very provocative and very useful. I have several questions. In terms of creativity, we quite often hear that lessening protection of intellectual property would be a disincentive for creativityand that the converse also would be true, that is, more protection for intellectual property would be a greater incentive for creativity. In light of what you have said, do you agree with that? Mr. COMPAINE. I think the primary question is determining these days what is intellectual property. There is no doubt that the creators of intellectual property need to be compensated, and adequately compensated. If that is eroded, I feel confident that there would be far less incentive for people to create. But the fundamental change is deciding what is the intellectual property. In the case of the computer algorithm, is the intellectual property something that a computer has created by putting in some information and then spitting out something that is readable or entertaining, or is the real intellectual property the computer program itself, the algorithm, that made the output possible? Mr. KASTENMEIER. Is it one or the other, or could it be neither? Mr. COMPAINE. In the tradition of copyright, that is, protecting creativity-intellectual property-probably it is the computer algorithm we want to protect. That is what we want to provide reasonable compensation for, that's what is actually doing the creating. That is very different from what we are used to doing. Mr. KASTENMEIER. Other than traditional copyright protection, are there other incentives that could be used successfully to increase creativity and perhaps access? In other words, in some respects is copyright outmoded as the device to reward economically? Mr. COMPAINE. Either outmoded or increasingly unenforceable, which makes it sort of moot. I am not a lawyer but one possibility might be increasing reliance on contracts that may provide greater upfront rewards to the first user of something. But I think very often there may have to be greater reliance on contracts between the creator and the purchaser, the original purchaser, such as a publisher who buys a computer program, or buys a method of doing something. Mr. KASTENMEIER. We have heard some predictions of what to expect from new technology and you have commented on this, but to restate the proposition, do you think society would be better served if the law responds to changes as they occur, or tries to anticipate them? Do you think we ought to try to anticipate change in this area? If so, how might that be done? Mr. COMPAINE. I think to try to anticipate the change is futile. It is a real swamp. We should have already learned our lesson. Ten years ago we couldn't anticipate what is happening today. And these grow off each other. One thing changes and that creates a number of other changes that we couldn't anticipate. My feeling is that any legislation will probably have to be very flexible and very general. We will probably have to rely on the courts to act as a tripwire. When you start seeing a bunch of certain types of cases in the courts, that may then be an indication that it is time for legislation. But it you try to anticipate what is going to happen, I think you will be back here every 3 or 4 years having these hearings and asking, "What do we do now?" Every 5 years you will be out of date. Mr. KASTENMEIER. Then your advice is to respond to these questions as they arise, but not wait too long? Mr. COMPAINE. It is not easy-I am not trying to minimize the gravity of this. In general, I think, yes. You have to wait and respond to real problems, recognizing in the short term there may be some confusion and a few inequities. But I think that is probably the safer and in the long term, more socially beneficial way than trying to figure out what is going to happen in this area. Mr. KASTENMEIER. I think I have used up my time. I thank you and I yield to the gentleman from California, Mr. Moorhead. Mr. MOORHEAD. Thank you. Don't you have pretty much the same problems in determining computer materials that you have at the present time? If you have a book or a study that comes out that is copyrighted and you issue a book report or a synopsis of it, you really are subject to the copyright laws. You talk about using an abstract, a longer article on the computer, and copying that. Don't you basically have the same old problems? If it is just a review you probably are not in any trouble but if it is for all intents and purposes copying the original article in a summary form that you do have problems. Mr. COMPAINE. The problem is if I write a review of something, or an abstract of something, presumably I could copyright it. But if you then publish the same review, word for word, someone would say you have violated my copyright. But if two publishers published the same word-for-word piece, because they both bought the same computer program which generated the review, how do you determine that one of those is protected and another is an unfair copy? They both used the same computer program. It gets more complex. How do you copyright a data base, an electronic computer stored data base when that data base is perhaps being updated every minute, and it is constantly changing? Mr. MOORHEAD. You talk in here about copying in the home. Now, you know there is legislation pending that would put an extra charge on the blank tape that is sold for a person's own use. If that bill is passed it would be legal to copy the materials that came in as long as you only used it for your own personal use and didn't sell it. Mr. COMPAINE. I don't want to get involved in that specific piece. Mr. MOORHEAD. We are involved with the specifics and not just the abstract. Mr. COMPAINE. That's right. That's why you are sitting there and I am here. I think that it gets much more difficult when we talk about the computer side of things because you start putting things in digitized forms and it is almost uncontrollable for you to prevent me from copying a floppy disc, especially with hackers around who can break any code and sell them. You can say, OK, we will put a 25-cent fee on every floppy disc that gets sold. The idea then is that you cannot enforce who controls the actual information itself. We are moving the control of in formation from the centralized printers and distributors out to the millions of homes and offices, each of whom can manipulate and change that information with virtually no outside control on it. Mr. MOORHEAD. But that is true to a great extent with books that are published. They are put out and people make abstracts of the book and they pull materials out of it but it is still floating around. Mr. COMPAINE. Very true, but it is very hard to reprint that whole book. It is very expensive to literally reprint that book, especially in a form that makes it look just like the original book. If I want to reproduce a textbook and do it in four colors and do the same type style, it is very expensive, and it is much easier to trace if someone should try to reprint copies without permission. If that same book is downloaded onto my floppy disc or computer main frame memory, I can duplicate that and transmit it around at virtually no cost. Mr. MOORHEAD. I want to thank you for getting us thinking about some of these many problems that are ahead of us. Obviously, we are going to be dependent to some extent on how the courts come down on these things and we are going to have to set some of the policy ourselves here in the Congress. But we will certainly be very interested in some of the answers that you may have to our problems as we move forward, and the help that you can, perhaps, give us. Thank you. Mr. KASTENMEIER. The gentleman from Kentucky. Mr. MAZZOLI. Thank you, Mr. Chairman. Let me first commend the chairman of our subcommittee for calling this whole series of hearings. I think it could well yield some information and some ideas for the future for ourselves and I thank the gentleman for putting himself out. Let me thank you, too, Doctor, for your statements. I was particularly struck by the way you said that it is really a swamp out there. I am beginning to think of some kind of a dank forest, if you take a wrong step you will get sucked up by quicksand. It really is, I think, both a legalistic as well as a technological swamp out there and somehow we have to navigate that swamp, hopefully, without being swallowed up by the quicksand pits there. Let me ask you, also, you said in answer to a question from our chairman that you didn't think that we could anticipate all of this because it is a real swamp out there and that we should respond but don't wait too long in responding and let the court be the tripwire. Isn't that really just stating what the state of today is? Mr. COMPAINE. I'm sorry, isn't- Mr. Mazzoli. Isn't that in a sense saying where we are today and yet we are trying to have this series of hearings to let us get into tomorrow in perhaps a little different posture than we have faced the problems today? Mr. COMPAINE. I guess what I am suggesting-I agree that these hearings are the right thing to do. As you go through this there are all sorts of interests out there, as you well know, and if you get too specific in what you come up with, such as a 50-cent tax on something called a video tape. Then what happens if, 15 or 20 years from now instead of video tape everything is digitized and stored in the computer and you don't have to have a physical piece to put in your recorder? It may be that the specificity of that legislation or regulation can be gotten around because of some superseding technology that comes faster than we thought or that we had anticipated. So that whatever you come up with has to be couched in such general ways that it embodies principles rather than too many specifics. Mr. Mazzoli. Actually, I thought that what we tried to do in setting up the Copyright Royalty Tribunal was to make it sort of general but the minute they put a specific dollar figure to the use of so many channels, immediately then everybody moves to wipe out their activity by saying that they went too far or didn't go far enough. Whether we try to make it so specific as to cite every dollar-andcent figure, or every percentage figure, or when we set up a general apparatus which would then react to specific situations, it seems we are still condemned and we still don't handle it right. Mr. COMPAINE. That is why I said this is a swamp. And I don't think the problem is going to go away in this session or the next session of Congress. In fact, I think copyright and the whole notion of what is intellectual property and how does it get protected might be one of the major issues through the end of this century. I really think it is complex enough that we are going to have to live with it for a long time. I wish I had something more optimistic for you but I don't see it that way. Mr. MAZZOLI. Thank you. I appreciate your candor. I guess that is really why I believe we are here today, to try to figure out if there is any way to anticipate the future. And I don't think we can anticipate it technologically because there are basement tinkerers and backyard inventors right now doing their number which is going to make obsolete everything which is now state of the art. We never could, and probably never should, try to anticipate what they are going to move. But I guess with the hearings we are trying to figure out if there are certain guideposts or immutable truths that we could somehow incorporate into law which would then more or less guide us into the future without limiting these inventors in this kind of initiative. And at the same time, without putting the creative community totally to this posture of just being picked to death by a school of piranha fish where they would have nothing left of their own creative abilities, so I guess we are going to be faced with that. Thank you very much, Doctor, for this opening presentation. Mr. KASTENMEIER. The gentleman from Michigan, Mr. Sawyer. I think you correctly described it when you said it was kind of a swamp. Since I have been in Congress, I have never gotten involved in anything that was more complex and more defying of an intelligent solution that satisfied all of the questions. I finally settled down to kind of a simplistic view which suits me well and that is get rid of the whole machinery. And let the people with the problems go out and work out their own solutions. You have the competing interests, as you are well aware of he producers of the programs, the broadcasters, cable, satellites, 100 DI mention professional sports and Ted Turner, and a few other lateral problems. Ôn difficult questions Congress tends to wait until some kind of a consensus or at least an appearance of a consensus just begins in become visible rather than to jump into the fray without eng I settle itself. But whenever we do that the courts step in then ant decide the whole issue and then we complain that the courts Le being too activist. I don't know what the answer is We are doing that right now with the Betamax problem, as VOL are probably aware. It really is a congressional proclem is 37 £ constitutional problem. It is a question of really making a law on what we are going to do with that. I guess they are getting a n befuddled by it, too. It just seems to me if we follow the policy of waiting it out and letting the courts be the tripwire. they end up disposing of the whole thing and in effect legislate it. Mr. COMPAINE You can always come back and legislate. My point was that you let the courts make a few moves and that helps create greater consensus or contention and then Congress can decide when it wants to make the move to settle things. But FI have to let the courts start that process I think you are also very right the much of this has to be settled by the contending forces out there to come up with some agree ments that they can all live with And we see how diffent that has been up to DOW. Mr. SAWYER. The Betamax, and I suppose ado recording is even more critical a prociem since there are some million audio recorders out there and theres only as a mi to quite a million, video recorders on there. So they have got very smar problems. 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